Navigating the New Executive Order: Fair Pay and How Syndio Helps

| January 24, 2025 | 4 min read
Illustration of gavel communicating new executive order and what it means for pay equity

A recent Executive Order, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” has brought significant changes to the landscape of federal contracting and DEI (Diversity, Equity, and Inclusion) initiatives. This has led to many questions about the future of fair pay and pay equity audits. If you’re a Total Rewards or Compliance leader, here’s what you need to know about the new Executive Order, and how Syndio can help as you navigate changes.

Do I still need to run a pay equity analysis?

The short answer is: Yes, you still need to ensure your employees — and this includes everyone — are paid fairly. The new Executive Order revokes a portion of Executive Order 11246, which requires that contractors conduct and certify that they conducted an annual pay equity analysis, but does not override the requirements to not discriminate. The best way to do this is to analyze pay to make sure it’s based on factors like performance, skills, and other legitimate pay policies when assessing for inconsistencies. This type of analysis is the only kind we support at Syndio.

Here’s a breakdown of the changes:

The OFCCP is changing: The Office of Federal Contract Compliance Programs (OFCCP) is still in place, though its scope was trimmed. The OFCCP is instructed to cease promoting “diversity,” holding federal contractors responsible for affirmative action, and encouraging workforce balancing based on protected characteristics. 

Affirmative Action Plans (AAPs) are no longer required: A major change is the impact to AAPs, which federal contractors previously had to prepare to comply with EO 11246. The new Executive Order revokes the portion of 11246 that requires contractors to prepare AAPs based on race, ethnicity, and sex. This critical change will have broad implications in the private sector, where many companies employ employees or firms to conduct this work. (Note, the obligation to prepare AAPs for VEVRAA/Section 503 — for Veterans and people with disabilities — was not revoked.) While AAPs prescribe conducting and certifying an annual pay equity analysis, its removal doesn’t override anti-discrimination law, including Title VII of the Civil Rights Act, and the Equal Pay Act.

Unlawful discrimination is at the forefront: The Executive Order emphasizes eliminating “unlawful discrimination.” This is the core purpose of performing pay equity analysis, which aims to identify and correct pay disparities based on factors like gender, race, and other protected categories. 

Unlawful DEI activities are in the spotlight: Federal contractors are required to certify that they do not operate any programs promoting DEI that violate federal anti-discrimination laws. Many companies are right now receiving memos from the government instructing them to “cease and desist” any DEI activities required by their federal contracts. 

Pay fairness remains a business imperative: Regardless of the legal changes, ensuring pay fairness remains a crucial business imperative. Companies are still focused on attracting, retaining, and engaging employees. And, as we continue to emphasize, federal law still prohibits discrimination.

State-level action may be coming: With less regulatory and legislative action at the federal level, we expect states to continue pushing for greater pay fairness, pay transparency, and — perhaps taking a page from the EU — more reporting. These situations are emerging and we’ll continue to monitor changes and share timely information. 

Don’t forget the EU Pay Transparency Directive: Many companies are global, and while rules at the U.S. Federal level are changing, keep in mind that major changes are already underway in the EU. The EU Pay Transparency Directive imposes new obligations on employers in EU Member States and multinational companies with employees in Europe, requiring:

  • Pay analyses to ensure transparency and eliminate pay discrimination
  • Clear communication on pay ranges in job postings
  • Regular reporting on pay gaps, particularly for employers with more than 100 employees
  • Processes for employees to request and access information about pay levels and gender pay gaps

This EU legislation adds another layer of compliance for global organizations and reinforces the business case for maintaining robust pay equity practices.

How does Syndio continue to help?

Syndio’s software is well-positioned to assist companies in this changing environment because it focuses on meeting compliance requirements and ensuring consistency for all employees. Here’s how:

  • Eliminating unlawful bias: Syndio’s tools are designed to identify and correct pay disparities stemming from unlawful bias, directly aligning with the Executive Order’s focus on eliminating discrimination. Unlike AAP-based analyses, Syndio provides tailored pay equity solutions that help address complex pay structures.
  • Reporting compliance: Syndio supports companies with an increasing onslaught of reporting and transparency requirements globally, using automation and centralization to ease the burden companies feel with manual approaches.
  • Fairness and optimization at scale: Fair and consistent pay practices that drive the business forward are critical for optimizing pay allocation. Syndio equips organizations with analytics to audit their pay policies and provides real-time pay recommendations that ensure all employees are paid fairly and consistently.

Pay equity analysis remains a priority

Although the new Executive Order changes the regulatory landscape, pay fairness remains essential. The emphasis on eliminating unlawful discrimination underscores the importance of compliant pay practices. 

Syndio’s technology provides organizations with the tools to navigate these changes effectively, ensuring compliance with legal obligations while supporting smart and scalable pay practices.

 

The information provided herein does not, and is not intended to, constitute legal advice. All information, content, and materials are provided for general informational purposes only. The links to third-party or government websites are offered for the convenience of the reader; Syndio is not responsible for the contents on linked pages.

 

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